Personal loans can be a panacea for some financial crises. Be it an emergency or a wedding, be it a home renovation or the urgency to buy a luxury item for your loved one – you can take out a personal loan from a bank or a financial institution to address this problem.
The new borrowers are advised to use a personal loan EMI calculator to streamline their money plan and act accordingly.
For those who don’t know, a personal loan EMI calculator is a tool that helps borrowers calculate the exact EMI (equated monthly installment) after entering three determinants of EMI, namely loan amount, interest rate and tenure.
Three determinants of the EMI calculator:
A) Employment: This is the period in which you want to pay off the loan. For example, if you want to repay the loan in 3 years, the term of the loan is 3 years (or 36 months).
B) Loan amount: As the name suggests, this refers to the loan amount you plan to raise. For example, if you plan to raise ₹10 lakh from the bank, the loan amount will be ₹10 lakhs.
C) Interest rate: This refers to the rate at which the bank (or other financial institution) charges interest. When the bank charges 1 percent interest per month, the ROI is 12 percent per annum, which you need to enter in the EMI calculator.
As you enter the three determinants mentioned above, the calculator will display the exact EMI you have to pay.
Loan amount: ₹10 lakhs
The EMI calculator uses this input to divide the result ₹33,214.
An interesting feature of the calculator is that you can adjust it to increase or decrease your result (i.e. EMI) based on your convenience.
For example, if you want to repay the loan quickly, for example in a period of 16 months, you simply need to shorten the term in the calculator. This will increase the EMI amount accordingly.
If you want to repay the loan over a period of 48 months, you can also change the term amount. This would reduce the EMI amount proportionately.
